The U.S. Securities and Exchange Commission (“SEC”) filed a complaint for fraud against Applied Bioscience Corp. in May 2020. The SEC alleges that Applied Biosciences Corp. sought to exploit the COVID-19 pandemic for profit. In March 2020, the company changed its focus from cannabinoid-based products to pandemic-related products to “help battle the spread of COVID-19.” In late March, the company issued a press release outlining their sales of home test kits to the general public for COVID-19. The SEC determined that no shipments occurred and that the press release was misleading as the company did not disclose the FDA had not approved or authorized the sale of any COVID-19 at home test kits.
The SEC’s complaint charges the company with fraud for violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
The case is Securities and Exchange Commission v. Applied Biosciences Corp., S.D.N.Y., Case No. 20 Civ. 3729.